Low Quality in Franchising is based on Ignorance & Misunderstandings

Predatory practices in franchising are simply low quality behaviors by low quality individuals.

lifeofbrianThey get away with it because of ignorance.

I don’t really care two hoots what anyone’s ethics or morals are.

I only care in moving to a sustainable business model that will attract, and not repel, smart small business investment.

I object to modern franchising’s practices that trade on the good work of high quality service providers: franchisors, law, regulators, politicians and cheesemakers.

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2 Responses to Low Quality in Franchising is based on Ignorance & Misunderstandings

  1. Carol Cross says:

    Ah! Yes! But the status quo of the law and franchising is designed to SUSTAIN franchisors as long as possible by using franchisees as merely expendable resources that serve the BRAND in both success and failure of the franchisee’s business.

    Everyone knows, except new prospective franchisees, that ALL small retail business startups are subject to 50% failure rates the first five years and that only about 29% survive as long as ten years. Yet, the franchise agreements and leases become premeditated legal traps, when the time terms are for ten and fifteen years and are personally guaranteed by the franchisee’s personal assets.

    As you have stated often, Les. Is is a clever way of redistributing money from the pockets of those who have to look for self-employment to survive, and also a clever way of contracting for cheap labor and eliminating all of the risk of the investment in a physical unit that wears the brand name. And, then, of course, the profits are always guaranteed for the franchisor and his investors because he takes them off of top line revenue instead of bottom line profits of the franchisee.

    Really an ugly and malicious business model that should be exposed and not sustained in free and democratic societies that believe in liberty and justice for all.

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  2. Carol Cross says:

    P.S. Would franchising be sustainable as a business model if the true risk of the investment, as known to the franchisor, were disclosed to new buyers before they signed the contract?

    Would franchisors who demonstrated 80% to 90% success rates of first-owner franchisees and actual profits for 50% of their system still be able to sell their franchises to those who are looking for self-employment? I think so! — Especially in recessions where jobs are not available.

    But is the durability of the franchise model dependent upon the ability of franchisors and the special interests to NOT disclose the risk and the rewards of the franchise investment to new investors in franchises? The “sustainability” of the franchisor’s system and not the sustainability of the franchisee’s business is the first priority for government and the special interests who profit from franchising.

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